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The perks & privilege of an RESP
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Ignite your Savings with Government GrantsGenerate an immediate return of 20 cents on every dollar you contribute! The Canada Education Savings Grant — up to a maximum grant of $500 per year and $7,200 lifetime per child. Who doesn’t like free money? Depending on your family income, additional grants may also be available.
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Don’t forget about the Tax SavingsEarnings in your plan are tax-sheltered. When withdrawn, those earnings are typically taxed in the hands of your child, who, as a student, may pay little to no tax on them.
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Easily accessible when you need itSavings in an RESP can be used for various education costs – not just tuition. The money can be used towards books, living expenses, other course materials and more – meaning accessing your money is easy.
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Flexible Options for Plan BIf your child takes a few years off before pursuing post-secondary education: no problem; you can keep your RESP open for up to 35 years. If one child doesn’t pursue education, you can choose a new beneficiary. You have options.
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The nitty-gritty: everything you need to know about RESPs
Maximum contribution: There is no annual contribution limit, but there is a lifetime contribution limit of $50,000 per beneficiary
Who qualifies: The “Beneficiary” is the student using the RESP for funding their post-secondary education. A beneficiary must be a Canadian resident with a Social Insurance Number (SIN) when the plan is opened.
Plan Types: Most plans are set up as an individual plan with one beneficiary, or a family plan where the beneficiaries are related siblings or cousins.
Who can contribute: The short answer is anyone. The “Subscriber” is the person who opens an RESP on behalf of the beneficiary. Any person may be a subscriber, but usually it is the beneficiary’s parent.
How long you can contribute: You can contribute for up to 31 years after you open an RESP and the plan can remain open for a maximum of 35 years.
Canada Education Savings Grant (CESG)
The Canada Education Savings Grant (CESG) is the most commonly accessed government grant in Canada. The grant is equal to 20% on your contributions to a maximum of $500 per beneficiary per year. Unused grant contributions can be carried forward into subsequent years, up to a maximum of $1000 per year. In total, the grant has a lifetime maximum of $7,200 per beneficiary, giving your savings plan a considerable boost.
Additional CESG
The Additional Canada Education Savings Grant is a supplementary grant that is offered in addition to the regular CESG. It is designed to give low- and middle-income families a little extra boost in their RESP savings and help them reach the $7,200 lifetime CESG maximum. On the first $500 of annual contributions, an extra grant of 100% is provided for low-income families, or 50% for middle-income families. These thresholds are indexed annually. For more information, you can visit the Employment and Social Development Canada website.
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Based on Annual Income |
Basic CESG on a $2,500 Contribution |
Additional Grant |
Annual Maximum Grant |
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Low Income Families |
20% up to $500 |
20% or $100 |
$600 |
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Middle Income Families |
20% up to $500 |
10% or $50 |
$550 |
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High Income Families |
20% up to $500 |
N/A |
$500 |
Canada Learning Bond (CLB)
For a child in a low-income family, the CLB provides $500 in the first year, then $100 annually to age 15, for up to $2,000 total. No personal contributions are required. The CLB is provided to low-income families in addition to CESG benefits.
When the Child Goes to Post-Secondary Education: There are two types of withdrawal options:
- Educational Assistance Payment (EAP)
An EAP may consist of earnings or “accumulated income” and the grant itself. When withdrawn, this money is taxed in the hands of the beneficiary. Proof of enrolment in a post-secondary institution is required.
- Post-secondary Education (PSE) Withdrawal.
A Post-secondary Education (PSE) Withdrawal is a withdrawal of contributions made by the subscriber while a beneficiary is eligible to receive EAPs. The subscriber may withdraw their contributions without repaying any grant.
Want to know more? Check out The stress-free guide to cashing out your child’s RESP
If RESP beneficiary does not intend to use the savings, for example if they opt not to attend post-secondary at all, you have four options:
- Keep the account open in case the beneficiary changes their mind. RESP accounts can remain open until the end of the thirty-fifth year after they were opened, giving beneficiaries plenty of time to use the funds.
- Name a new beneficiary.
- Transfer the earned income. The subscriber may transfer up to $50,000 of the earned income into an RRSP or a Spousal RRSP (if their contribution limit has room). All grant money is returned to the Government of Canada.
- Withdraw the funds and close the account. While grant money will be returned to the government, the money earned on the grant remains with the subscriber.
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All-in-one RESP Guide
This handy guide answers all of your questions about investing in your child's future with an RESP.
The stress-free guide to cashing out your child’s RESP
Going to university is a life change that is exciting, emotional and, for most Canadian families, expensive. Here's a helpful article to access your savings stress-free.
